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Boeing Looks Around, and a State Worries

A worker stands in front of an engine of a Boeing 777 at an assembly plant in Everett, Wash. The airplane manufacturer is considering building the 777X away from its longtime base on Puget Sound.Credit
Andy Clark/Reuters

EVERETT, Wash. — Riveters once ruled here, as Boeing airplanes rolled off the line and into the sky from giant factories where rivers of aluminum were pounded into form and function. And Boeing, founded in nearby Seattle in 1916 in the era of the Sopwith Camel, returned the favor, building up the Puget Sound region as a blue-collar powerhouse from the 1940s through the commercial jet age. Almost half of the company’s 171,000 employees still call Washington State home.

But the next chapter of that old relationship has become a cliffhanger of politics, economics and perhaps, some suspect, brinkmanship and bluff. Where the company will assemble its next generation of commercial airplane, the 777X — which only a few months ago looked locked-down certain to be right here — is now up for grabs, with a national scramble of states and cities bidding for Boeing’s hand with tax breaks, incentives and promises of labor congeniality.

With a deadline looming this week for best offers, and a decision promised by the company early next year, tens of thousands of jobs and billions of dollars in wages and taxes are at stake, along with the identity of a region that long ago claimed the jet age as its symbol, in Seattle’s revolving Space Needle.

“It would be the death spiral of aerospace in Washington State,” said Ray Stephanson, Everett’s mayor, contemplating the possibility of Boeing’s building the 777X in some other state. As he spoke in his office, a scale model 777-300, angled as though in takeoff, sat by a window. “There’s a tremendous amount of anxiety.”

Boeing had conditions from the beginning on the 777X: big incentives from the State of Washington and big givebacks by its largest union here, the International Association of Machinists and Aerospace Workers. The state came through, delivering in a special session of the Legislature a package worth $8.7 billion through 2040. But union members balked, voting down a contract extension last month that would have frozen their pensions. So Boeing began sending out requests for proposals to more than a dozen states and cities around the nation.

State legislators in Missouri last week delivered a $1.7 billion Christmas gift should Boeing come their way. Economic development officials in Alabama, Kansas, North Carolina and Utah — Boeing has declined to provide a full list of suitors — were putting together bids, too, and bragging about their respective environments of can-do optimism.

Photo

Boeing employees marched to the International Association of Machinists and Aerospace Workers union hall on Nov. 13, where they voted to reject a contract that would have frozen their pensions.Credit
Joshua Trujillo/seattlepi.com, via Associated Press

“It’s our job to sell them our area and tell a story,” said Thomas M. Battle Jr., the mayor of Huntsville, Ala., one of the places Boeing contacted as a possible new partner. “They’ve asked for a good community, one that works with you, one that has a high level of education, that supports their work force and makes it easy for them to recruit.”

Spokesmen for Boeing and the machinists’ union both said that no talks were underway to reopen negotiations or reconsider last month’s contract vote.

But state officials said they believed the region had aces in the hole that would ultimately prevail: experience in producing airplanes under deadline conditions and closer proximity than most of the competition to Asian suppliers and customers, an important consideration for ocean-borne freight shipment.

Boeing has $95 billion in orders and commitments for 777Xs, and has pledged its first deliveries by 2020, which does not leave the company enough time, state officials said, to consider any place not ready for prime time. Boeing has not said how many jobs the 777X program would produce, but it employs about 20,000 people here in Washington now building wide-body 777s — a production line that will be phased out as the 777X takes over.

“The one place in the world that knows how to build a plane like this is Washington,” said Alex Pietsch, the director of the office of aerospace for Gov. Jay Inslee, a Democrat. “This is where the company can build with the least risk.”

Corporate shopping for the best deal, the lowest taxes and the sweetest incentives is a multibillion-dollar enterprise in America — often with outcomes that do not fully materialize or cannot be accurately measured even for the winning contenders. An investigation by The New York Times last year found that more than $80 billion a year in incentives are given by states, cities and counties to companies that often pit local officials against one another to get the most lucrative packages.

Boeing’s courtesan dance has also spurred worried analogies between the Seattle region and another city that suffered dearly from industrial flight: Detroit.

Photo

A woman walked out of the City Hall in Everett, Wash., on Monday.Credit
Matthew Ryan Williams for The New York Times

Industry experts say that like the dispersal of automobile manufacturing from Michigan, aircraft making is becoming less and less an assembly-line business of the sort Seattle workers thrived at, and more like a symphony where highly technical components — a wing, a floor assembly — are fabricated in far-flung places, often by lesser-trained and lower-paid workers, and by lots of robots.

A spokesman for the machinists’ union, Bryan Corliss, said that the union was open to further discussions, but that members “have spoken pretty loudly and clearly that they’re not interested in tearing down our current contract — so anything going forward would be building on what we have.”

Boeing has already moved thousands of jobs away from Washington in recent years and has said that diversification is a long-term corporate strategy. Its new 787 Dreamliners are built in South Carolina, and the company, in 2001, moved its corporate headquarters to Chicago.

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“Puget Sound is probably going to face a reality not unlike what Michigan faces: ‘You guys have to come in at a reasonable price, because we can move our stuff to other places,’ ” said David Gillen, a professor of economics and the director of the Center for Transportation Studies at the University of British Columbia.

But in other important ways, Seattle is no Detroit — if it ever was. Technology companies like Microsoft and Amazon have staked a major claim on the culture and the job base in recent years. Those companies have created new diversity in the economy that is likely to keep the region stable even if Boeing moves its assembly line elsewhere. But they have also created fears that blue-collar workers could be squeezed by the high-rent, high-wage technopolis that increasingly dominates life in Seattle and its suburbs to the east.

In Everett, a low-rise waterfront city of brick and wood 25 miles north of Seattle, the ups and downs of aviation history dictate for many people a practical attitude toward Boeing and its future. Older people like Art Taft, 70, remember well hard times like the 1970s when nothing went right and layoffs by the thousands struck fears that Boeing might not survive at all. Like many other people here, he seems to be taking the threats of departure in stride.

Mr. Taft, a retired machine repairer for a company that sold components to Boeing, said the constellation of contractors that cluster now in proximity to the factory — the world he worked in — needed Boeing to survive. Even if it means moving production-line jobs to other states. And if the 777X plant is somewhere else, it just means suppliers will “ship somewhere else,” he said. Simple as that.

As long as suppliers have Boeing as a customer, he said, “I don’t think it will affect them.”

A version of this article appears in print on December 11, 2013, on Page A16 of the New York edition with the headline: Boeing Looks Around, And a State Worries. Order Reprints|Today's Paper|Subscribe